The Rising Star: All Eyes on Brazil

In a country where people give any excuse to party, soccer is considered a religion, and much of life is spent on the beach, Brazil is not only an attractive destination for tourists, but also for foreign investment. In 2007, total foreign direct investment in Brazil amounted to a new record of $34.6 billion. Unlike the other BRIC nations, Brazil differentiates itself with its stability, democracy, neutrality with other countries, and a lower GDP growth rate of 5.3%; the reason for this smaller number is due to the fact that it is wealthier and more urbanized than India and China. Under the presidency of Luiz Inácio Lula da Silva, as seen in the graphic to the right, since 2002, Brazil has benefited from a period of political and economic stability. As a result, president Lula has received a high approval rating of 66.8% from voting-age Brazilians. Much of this support has come from the poorer classes of society that have experienced heightened standards of living largely due to governmental handouts. On an economic level, the inflation rate has remained relatively low at around 4%, which has been implemented to allow Brazil to maintain levels of long-term sustainable growth. Its main source of international influence derives from its vast reserves of natural resources, which enable it to be an export-driven nation that ships goods, such as soya, ethanol, iron ore, beef, and machinery. Over the past couple of years, Brazil's success in exports was helped in part by productivity gains coupled with high commodity prices around the world. As the global demand for natural resources continues to escalate, this South American superpower sits in a secure and advantageous position to meet these needs for years to come. However, in order to capitalize on its foreseeable prosperity in the future, Brazil must address some of the major issues confronting it, such as the endangered Amazon rain forest, corruption, crime, and insufficient infrastructure.

With one of the largest reservoirs of carbon dioxide, Brazil's Amazon rain forest plays a critical role in regulating earth's ecosystem by abating the effects of global warming. Unfortunately, the Amazon is being deforested at an alarming rate as it is seen as a source of inexpensive land for farmers to cultivate sugar cane and soybeans on, and for ranchers to use as pastures for cattle. It is not surprising that 75% of Brazil's carbon emissions are attributed to the destruction of the rain forest. The irrevocable costs of environmental devastation do not justify further expansion into the country's northwest to satisfy demands for grazing land and agriculture.The prevention of illegal deforestation must be made a priority not only for Brazil, but also for the rest of the world because the worldwide effects will take a much more serious toll on planet earth than on this single nation alone. To resolve this problem, the Brazilian government and forest preservation organizations around the world have to realize that the net environmental benefits of preventing further annihilation of the Amazon outweigh any economics profits in the long-term. One solution would be to create carbon-credit markets, whereby the government sequesters intact areas of the forest while selling carbon credits to individuals, companies, and countries interested in lowering their carbon footprints. Meanwhile, Brazil must take more stringent measures to avert and penalize the bribing of Amazonian governors for allowing tracts of land in the Amazon to be illegally sold off.

In relation to bribery, corruption remains a major challenge facing Brazil's development. Similar to other third world countries, government officials are often paid to permit the occurrence of illegal activities or to expedite otherwise time-consuming procedures, such as the processing of official documents. In order to reduce the amount of corruption, it is in the nation's best interest to simultaneously minimize the amount of bureaucracy that impinges on the efficiency of doing business in Brazil. The general mentality in Brazil is that people are rewarded for their "ability to navigate around the bureaucracy," summarizes economist Simeon Djankov. By implanting fewer bureaucratic controls, there will be less of an incentive for businessmen and officials to break the law in order to carry out deals. In correlation with corruption is the issue of crime, which has plagued the nation's largest cities. One of the most crime-ridden areas is Rocinha, the favela (shantytown) pictured to the left, which is violently ruled by gangs of drug dealers. Through a stronger educational system, more employment opportunities, and a greater effort to dissolve gang related activities, the number of prison entrants will assuredly decrease as crime falls. The overpopulated penitentiaries, where gang chiefs operate and make orders from inside, are "human warehouses, universities for crime, factories for revolt," comments prosecutor Fernando Capez. It is clear that eliminating corruption and crime go hand in hand and will require bold steps on the government's behalf to ensure a safe and ethical society in Brazil's future.

The last key success factor that Brazil encounters is improving its infrastructure. The money that is received from its export-driven revenue should be reinvested into the roads, ports, and other foundations that help transport these same goods. Infrastructure investment does not even account for 2% of its GDP, which ideally should be at least 3%. Transportation costs amount to nearly 13% of Brazil's GDP compared to 8% in the US, a clear indicator that room for improvement exists. To emphasize the gravity of this issue, an interesting statistic predicts that by 2013, the consumption of ethanol in Brazil will double. If this is true, the country will need to invest $90 billion in new mills as well as $2 billion for railways, pipelines, and storage. As a byproduct to build up its framework, not only will greater transportation efficiencies arise, but also the creation of jobs that will help shrink its high unemployment rate of around 10%. Brazil's international influence can be attributed to the currently inflated commodity prices; however, its long run success depends on the critical infrastructure needed to accommodate this future prosperity. The country's extensive exigencies for road and rail networks is just one of several proposals needed for Brazil to maintain sustainable growth throughout this century. Bestowed with a plethora of natural resources, evidence verifies there is much untapped potential to ensure its emergence as a global superpower. While it is important for Brazil to strategically develop its infrastructure, lower corruption and crime rates, and preserve the Amazon, perhaps the latter is the most difficult challenge confronting Brazil. An undesirable consequence shared by all the flourishing BRICs is the inevitable depletion of resources and the environment. For Brazil, the fate of its long-term success depends on how well it can support its accelerated growth while concurrently making strenuous efforts to prevent the destruction of its rain forest.